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World Bank Group Launches New Strategy for Nepal

KATHMANDU, October 18, 2011 – The World Bank Group reaffirmed its support to Nepal’s efforts at achieving durable peace with investments in development and poverty reduction when it launched a new assistance strategy for Nepal for the next two years here today.

Given the transitional nature of Nepal’s current situation – with a new constitution being written and elections to follow – the World Bank Group has prepared an Interim Strategy covering Fiscal Years 2012 and 2013. The strategy was discussed by the Bank’s Board of Executive Directors in Washington D.C. last month.

The World Bank Group in Nepal includes the International Development Association (IDA), the concessionary financing arm and International Finance Corporation (IFC), the private sector arm. Two more World Bank Group organizations, the Multilateral Investment Guarantee Agency (MIGA) and the World Bank Institute (WBI) offer investment insurance and capacity building services.

The new strategy sets out the basic parameters of the World Bank Group program but remains flexible to respond to the challenges of implementing the proposed federal structure, once it is formally adopted. It proposes development programs that are consistent with the Government of Nepal’s Three Year Plan and reflects considerable continuity, largely building on programs with successful track records that are adapted to local conditions. It also emphasizes greater selectivity, focusing on areas considered vital to Nepal’s development and complementing programs supported by other development partners during the transitional phase.

Over the next two years, Nepal can potentially benefit from an allocation of about US$ 400 million from IDA, subject to good performance and prudent economic management. These funds could finance four to five new operations per year. IFC can potentially commit US$ 25-30 million on average annually, depending on the availability of viable investments and improvements in the business climate.

“Our assistance program will help improve food security, reduce malnutrition, improve immunization coverage and enhance the access to and the quality of education,” said Ellen Goldstein, World Bank Country Director, at the launch event.“It will also support Nepal’s efforts at strengthening governance and accountability, fostering gender equality and social inclusion, and removing key bottlenecks to higher economic growth and more jobs through investments in rural finance, transport and the energy sector,” she said.

"We hope to create a positive impact on private sector growth through investments in infrastructure, clean growth, and by providing advice which we hope will enhance trade and support a better business environment for the private sector, including small and medium enterprises," said Rajeev Gopal, IFC Resident Representative in Nepal.

Supporting the Government of Nepal’s overarching goal to build a peaceful, prosperous and just Nepal, the strategy is organized around three ‘pillars’ that emerged during consultations within the World Bank Group and with the Government of Nepal, donor partners and key Nepali stakeholders.

The first pillar intends to enhance connectivity and productivity for growth. The second focuses on reducing vulnerabilities and improving resilience. The third pillar concentrates on promoting access to better quality services. Governance, accountability, gender equality and social inclusion are themes that run across all three pillars.

Within each of these pillars, the strategy identifies specific areas where the World Bank Group can make a difference. For IDA, these include roads, food security and livelihood vulnerability, education, health, urban services, and disaster management. For IFC, these include improving access to finance and investment climate, trade facilitation, lending to Small and Medium Enterprises and trade finance facilities for local commercial banks. IDA and IFC expect to work together on power development, agriculture and climate change.

Finance Minister Barsha Man Pun, Vice Chairman of the National Planning Commission Deependra Bahahur Kshetry and Finance Secretary Krishna Hari Baskota were among senior Government of Nepal officials who addressed today’s event, chaired by Chief Secretary Madhav Prasad Ghimire. President of the NGO Federation of Nepal Netra Prasad Timsina and Senior Vice President of the Confederation of Nepalese Industry (CNI) Narendra Kumar Basnyat also offered comments. Other participants included Members of the Constituent Assembly, Secretaries of the Government of Nepal, Ambassadors and heads of development agencies, academics, civil society and youth leaders, development practitioners and representatives of the private sector and the media.

Earlier today Goldstein and Baskota signed an assistance package of US$ 43 million for the implementation of Phase 1 of the Modernization of Rani Jamara Kulariya Irrigation Scheme. Located in Kailali district in the far western Tarai region of Nepal, Rani Jamara Kulariya is one of the most prominent Farmer Managed Irrigation Schemes in the country, with a total command area of 14,300 hectares. It constitutes three independent, traditional irrigation systems constructed, operated and managed by generations of farmers, mainly from the indigenous Tharu community. The Rani system dates back to 1896.

Nepal has a long tradition of farmer managed irrigation systems with a strong sense of ownership and farmer organizations are typically strong and dedicated to rural development.

“About 25,000 farming households comprising close to 160,000 people are expected to benefit directly from the project,” said Goldstein. “The project will improve the reliability of water supply and help farmers better manage risks associated with droughts, floods, and fluctuations in the availability of water during the agricultural seasons.”

In the first phase, the project will support the modernization of the irrigation system by substantially rehabilitating and upgrading the main and secondary irrigation and drainage systems and flood management infrastructure, and by training Water Users Associations to improve their ability to manage the water and maintain the infrastructure. It will also carry out a series of agriculture production support activities in the project area through demonstrations, farmers’ field schools, and other adaptive processes.

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